Unusual Options Activity: Aspen Aerogels (ASPN)

Specialty insulation producer Aspen Aerogels (ASPN) is up 27 percent over the past year, slightly beating out the overall stock market. One trader expects further outperformance in the coming half year.

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  • That’s based on the July 19th $22.50 calls. With 204 days until expiration, 7,013 contracts traded compared to a prior open interest of 180, for a 39-fold rise in volume on the trade. The buyer of the calls paid $1.50 to make the bullish bet.

    Aspen shares recently traded for about $15.50, so shares would need to rise $7, or 45 percent, for the option to move in-the-money.

    Shares are already at their 52-week high of $15.52. And they have nearly tripled from their 52-week low near $5.32 since the end of summer, so such a further rally could be possible.

    Aspen isn’t yet profitable, but revenues are soaring, up 65 percent in the past year. Trending towards profitability should be good for shares in the coming months.

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  • Action to take: With a market cap of $1 billion, this is a smaller speculative play, which could lead to big returns over time. The company’s size could also make it a buyout target from a bigger industrial player in the years ahead.

    For traders, the July calls play well to the current rally in shares. The trade can potentially deliver high double-digit returns.

    Traders have time to get into the trade, so they can build a partial stake and use any big down days for shares to build the position.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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